What Motivates Participation in Corruption and How Does Such Participation Affect Firm Performance?

What motivates local executives to participate in corrupt behaviors, to what extent do external factors such as bureaucratic constraints affect bribery, and does bribery affect firm performance? To answer this question, we conduct a mixed-methods study where we interview 21 executives in Kyrgyzstan and Georgia and quantitatively analyze World Bank Enterprise Surveys data for triangulation and complementary findings. Generally, the findings shed light on what motivates local executives in corrupt environments to decide to participate in bribery – it pays off and is commonly viewed as acceptable. Interestingly, many qualitative findings differ from quantitative findings. Interviews suggest that informal competition has no effect on bribery or firm performance, whereas quantitative analysis indicates that informal competition has a statistically meaningful effect. Findings from the interviews complement past research suggesting that bribery improves firm performance, supporting a “grease the wheels” theory. Overall, the study adds insights into the nascent literature on corruption – especially in former Soviet Republics – and can inform policy makers and practitioners on means for reducing corruption.